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CredPal CEO Says BNPL Is Necessity, Not Luxury, for African Consumers

In emerging markets like Nigeria, where credit is either difficult to access or comes at a high cost, making certain everyday essential purchases can be challenging for consumers when they have no other option but to pay in full, all at once.

As a result, plugging this hole with a buy now, pay later (BNPL) service will help meet a basic need for millions of African consumers who depend on the product for their day-to-day livelihoods.

“I always say that for the African consumer, BNPL isn’t a nice-to-have — it’s a basic necessity,” Fehintolu Olaogun, co-founder and CEO of consumer credit startup CredPal, told PYMNTS in an interview. “People actually want to make purchases, but they cannot buy because they have to always pay in full which is a huge, huge problem for them.”

It’s this problem that the Lagos-based firm is trying to solve — not just for consumers, but also for online and offline merchants who can increase their average order volumes by as much as 40%, Olaogun said.

Given that BNPL is still a relatively new product in the local market, educating consumers on how their unique situation impacts their credit limit has been key.

“[We tell customers], ‘Even though you want to buy an item costing a million naira [$2,000], we’re only going to give you credit for half of that because you’re earning a monthly salary of X amount,’” he explained, adding that this strategy also protects consumers from taking on more debt than they can afford.

Read more: CredPal Raises $15M for BNPL Improvements

Since launching in 2018, the Africa-focused BNPL firm has grown significantly, and recently raised $15 million earmarked for expanding its consumer credit offerings in Nigeria and scaling to new regional markets where BNPL activity is gaining traction — Kenya, Cameroon, Egypt and Ghana.

Distribution: The Devil Is in the Details

With the new capital injection, CredPal also plans to launch new partnerships with merchants on CredPal Pay, a merchant suite enabling both online and brick-and-mortar businesses to seamlessly onboard customers and accept BNPL services.

“[The technology] takes most of the pain of having to onboard and train merchants on how to use the tools out,” Olaogun noted, adding that the infrastructure will help to accelerate the firm’s growth and facilitate its expansion to new markets in the long term.

However, to achieve that goal, one of the biggest hurdles the company has to jump over is distribution and acquiring a significant number of merchants.

“You need to be able to onboard as many merchants as possible because that’s your primary distribution channel,” he said.

This can be “tricky” because even though merchants are quick to embrace the product, there are several things that need to take place first before they can make their first transaction, and not all small retailers they approach see those steps through.

For example, a merchant who is excited to use the product might go through the onboarding process, but because they do not own the store, the interest to push CredPal as the first and primary payment option might dwindle over time, Olaogun explained.

“So, while there’s a lot of interest from merchants, in between that interest and the actual deployment and first transaction, you need to take care of some things — like I say, the devil is in the details,” he continued.

Smartphones, Internet Fuel BNPL Growth

Due to the increase in online purchases and the use of technology due to the pandemic, Olaogun said there’s been a surge in the adoption of CredPay’s mobile application, which has eased the pain point of having to distribute from the merchant point of sale.

People are starting to want to live better lives, he continued, “and BNPL is just what they need to be able to afford things [like electronics] and pay them over time as opposed to having to pay for them once.”

The growth in smartphone and internet usage has also fueled BNPL growth on the continent, he added, allowing users — many of whom got their first smartphone through CredPal — to get financially and digitally included.

“All of that is helping us get more demand on the electronic side, which is good for us, and we see that continuing to increase even as we scale across other markets,” Olaogun said.

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